Winona to sell off Hardee's block

(2/19/2018)

by CHRIS ROGERS

The city of Winona’s Port Authority Commission announced plans to sell the entire Hardee’s block to a local development company for the construction of retail stores, apartments, and a charter or private preschool.

According to Port Authority Commission member and Fastenal Vice President for Real Estate Dana Johnson, the prospective buyer is Main Square Development, LLC.

For years, city leaders have had big dreams for a large, mixed-use development at the Hardee’s block, and last year, the Port Authority spent $800,000 acquiring the only remaining piece of the block not in city ownership — the former Hardee’s restaurant. Now, the city owns the entire block, and last Thursday, the Port Authority Commission met in closed session to discuss an offer from an undisclosed party to purchase the block.

The Port Authority Commission — which includes appointed business leaders and City Council members Al Thurley and George Borzyskowski — discussed the offer in private for about 30 minutes on Thursday before reaching an agreement. Back in public session, the commission voted unanimously to direct staff to negotiate a sale agreement with Main Square Development.

“This a result of our downtown Opportunity Winona project,” Johnson said. “And part of that was to bring focus to our downtown so we have more choices for workers and professionals in downtown.” This project will bring investment energy that will help all of downtown Winona, Johnson added.

While city officials did not disclose what price Main Square Development offered, Johnson and city manager Steve Sarvi said that it would be enough for the city to recoup its own investment in the site. That is significant because, since they launched the Opportunity Winona brand in 2015, city leaders have signaled a willingness to subsidize major private developments downtown with city tax breaks, with city financial assistance, and by selling city-owned property at below-market prices — possibly even giving land away. According to Johnson and Sarvi, the city is not giving away the Hardee’s block. Main Square Development’s purchase offer is generous, Sarvi said in an interview.

Currently, virtually the entire Hardee’s block is being used for parking. The neighboring Winona County Government Center and the Winona County History Center lease parking spaces on the site, there is also public parking available, and it is a convenient parking location for events at the Historic Masonic Temple Theatre and the Winona Friendship Center.

If those parking spaces are converted into stores, apartments, and a preschool, how will the city address the loss of parking? The city will continue working with parking experts at Walker Consultants to determine how this and other new developments will impact the availability of parking in downtown Winona, Sarvi responded. Sarvi also specified that the city will continue to meet its contractual obligations to provide parking to the county and the history center. He added, “[Main Square Development] is making every effort to provide parking for their own users on their property.”

City leaders also have big hopes for the Historic Masonic Temple Theatre becoming a destination venue for performing arts events downtown. Would Main Square Development’s project sacrifice parking needed to make those hopes a reality? Nearby parking lots are fairly full during the day, but in the evening — when the events at the theater would be held — there are empty spaces, Sarvi responded. He added that the city is looking at potential sites for creating new surface parking nearby, though he did not specify where.

What will the proposed development look like? Sarvi declined to describe the proposal, other than to say that it would include retail, residential units, and a preschool. It would not be a Winona Area Public Schools preschool, he said. Asked if it would be a charter school or a private school, Sarvi replied, “Yep.”

The city’s 2007 comprehensive plan lays out a broad-brush vision for what kind of development the city wants at the site: a mix of commercial and residential units with some parking. In recent years, city leaders have talked about how a development at the Hardee’s block could build on the city’s plans for renovating the Masonic Temple, build on Winona State University’s plans to move its art department into the Laird Norton building, and contribute to a downtown “arts and culture district.”

The Port Authority Commission met in closed session in April 2017 to discuss its own purchase offer to buy the Hardee’s site. As required by state law, a recording of the meeting became public information after the city’s $800,000 purchase was finalized, and in that recording, Sarvi played devil’s advocate. He reminded Port Authority Commission members that the city could use its zoning code and its comprehensive plan to influence what sort of development occurs on the site without having to buy the property.

“If it’s just a matter of control, we control the zoning. We control a big chunk of the rest of that lot, so we could guide whatever’s going to happen there without purchasing it,” Sarvi told the Port Authority Commission. “I’m just saying consider that. It’s a lot of money,” he added.

No, this site has too much potential, Johnson replied during the April 2017 meeting. “It’s a big, big project,” he said, drawing out the word “big.” He added, “The only way we’re going to do that is if we control the space.” Johnson also pointed out that, in previous years, the city invested serious money into acquiring the other parts of the block. “We got a lot of heat for that, like, ‘Why are we doing that?’ Well, ultimately we need to do something with this lot that is more long-term,” he stated.

Going forward, city staff are expected to negotiate and draft a formal sale agreement with Main Square Development. The Port Authority Commission must hold a public hearing before voting to sell the land.

Developer to lease, maybe buy, city parking lot

Also last Thursday, the Port Authority Commission approved a contract to lease municipal lot number 13 to 102 Walnut Winona, LLC. The small city parking lot at 167 East Second Street is just west of the Winona Waters building and currently holds 20 12-hour public parking spaces. Peter Shortridge is the managing partner of 102 Walnut Winona, LLC, and he and his partners are about to launch an over-$9-million historic renovation project at the former In*Tech buildings at Second and Walnut streets.

The newly signed contract allows Shortridge’s firm to rent the city parking lot for its own construction staging and customer parking needs for $2,500 per year. The lease is a one-year lease with options to be renewed for the next three years. The deal comes with an option for Shortridge’s company to buy the city-owned parking lot for $95,300. The company could exercise that option right away and buy the parking lot immediately, or, by paying an annual $1,500 fee, the company could hold on to the exclusive option until 2020.

At the Thursday meeting, the Port Authority Commission also supported giving Shortridge a loan for the project. Last fall, the City Council and Port Authority Commission granted Shortridge $550,000 in tax increment financing (TIF) for the renovation project. On Thursday, Shortridge also asked for a $150,000 below-market-rate loan from the Port Authority.

“I appreciate everything you’ve done so far, it’s beautiful and wonderful for Winona,” Port Authority Commission member Laurie Lucas said, in an apparent reference to Shortridge’s work on the Latsch Building and other properties. “My only concern is setting a precedent.” Will future developers expect to get multiple rounds of assistance from the city, Lucas asked. In an interview, she explained, “We had already given him the TIF, and worked with him already on finance.” Winona is going to have a lot more development projects come forward in the future, she said. “We’re going to run out of money that we’re going to have to loan,” Lucas stated. Lucas’ fellow commission members did not share that concern, and city staff members pointed out that on projects of this size, the city has traditionally aided developers. Lucas and the rest of the commission voted unanimously to support the loan.

City staff still needs to find out whether Shortridge’s project could utilize city-held federal loan funds without triggering a requirement to pay construction workers prevailing wages, and the City Council still needs to approve the loan.

Aghaming, Prairie Island, food trucks on Tuesday’s council agenda

On Tuesday, the City Council is expected to vote on an agreement that would transfer management of city’s Aghaming Park to the U.S. Fish and Wildlife Service (FWS), a new ordinance that would make it easier for food trucks to operate in the city, and a final contract with the new managers of Prairie Island Campground.

Across the Wagon Bridge from Latsch Island, the backwaters and trails of Aghaming Park were a gift from John Latsch to the city of Winona decades ago. While owned by the city, the land is across the Wisconsin state line. For years, the city has tried to get the FWS’ National Wildlife Refuge to take over management of Aghaming Park. The refuge system already encompasses many nearby backwaters and river bottom forests, including other land originally donated by Latsch to the city. However, in years past, the FWS said it was unwilling to take over management of Aghaming unless private property within Aghaming Park — in particular, the late Ray Martin’s boathouse — was removed.

The proposed agreement essentially draws a circle around the Martin family’s boathouse and excludes it from FWS responsibility. Throughout the rest of Aghaming Park, the city would still own the land, but the FWS would take responsibility for managing it.

According to FWS Winona District Manager Mary Stefanski, camping and fires would be prohibited in Aghaming Park and motor vehicles would only be allowed from December 1 to February 28. She said those were existing city rules and not FWS rules.

Stefanski said that if the proposed management agreement is approved, the FWS would work with the city to develop a management plan for Aghaming Park, which would spell out what activities are allowed or prohibited, whether any sensitive areas need special protection, and what conservation work, if any, would be done.

The full City Council agenda is available online at www.cityofwinona.com under “public documents.” The City Council will meet at 6:30 p.m. on Tuesday in the council chambers on the third floor of city hall, 207 Lafayette Street. This meeting is open to the public.